The Government is "not profiteering" from selling its granite stockpile to the construction industry at a higher price, National Development Minister Khaw Boon Wan said on Tuesday evening.
In setting the higher price, the Government wanted to encourage the industry to actively source for granite from other countries in the wake of a supply disruption from Indonesia, Mr Khaw wrote in a blog entry posted a few hours after Nee Soon GRC MP Lee Bee Wah had raised the question in Parliament.
He said: "The issue of profit is not a relevant consideration because the motive in setting up such a stockpile is to help the industry cope with sudden shortages in granite."
The granite stockpile was not set up by the Government as a business, added Mr Khaw.
Releasing the granite stockpile is a "contingency measure" to help the industry cope while they contract and import from alternative sources of supply.
Mr Khaw's strong defence came after Ms Lee commented in her speech during the Budget debate that some people had asked if the Government was profiteering from the price hike.
Last month, The Straits Times reported that the Government would raise the granite stockpile price from $30 to $50 a tonne this month. This was because there had been a sudden disruption in supply from Indonesia.
Because it was unclear whether the disruption would be temporary or permanent, the authorities had urged the industry to ramp up supply from sources further afield.
Setting the price at $30 a tonne for a month initially ensured stable prices "while (the industry) started to make arrangements to ramp up supply from other sources", said Mr Khaw.
This was to ensure that Singapore's construction industry can continue seamlessly, despite the Indonesian disruption.
In setting the stockpile price, the consideration is not about profit margins but about ensuring industry is incentivised to actively source for alternative supply sources, the minister said.
"If the stockpile price is set too low, there will be no reason for importers to go for other (more costly) sources. And if they do not do so, we will rapidly deplete our stockpile and there will be no buffer to help the industry should a similar disruption of another supply source occur."